A Qualified Domestic Relations Order (“QDRO”) is a legal document or special order that allows for the tax-free transfer of retirement plan assets to a person in connection with a divorce or legal separation. The person whose account or benefit is being divided is called the “participant.” The person who is to receive a portion of the participant’s benefit is called the “alternate payee.” The alternate payee could be the spouse, former spouse, child or other dependent of the participant.
Congress passed laws that require QDROs to be used to divide certain retirement assets, such as private-sector 401(k) plans and pension plans. Retirement plans that are subject to the QDRO rules require a properly drafted QDRO to be submitted before retirement benefits are divided. It is not enough that parties to a divorce or legal separation agree to divide a retirement plan or that a state court enters specific orders at a hearing to divide a retirement plan. Without a QDRO, the retirement plan assets will simply not be divided by the plan administrator.
Keep in mind that there are thousands of retirement plans. Each plan administrator applies its own interpretation of the QDRO rules and has its own guidelines for approving QDROs, which presents challenges in drafting a QDRO that will be approved.
When QDROs do not conform to plan guidelines, parties to a divorce or legal separation waste time and money. Further, the parties may be unable to divide plan assets or may fail to address important future events that impact plan benefits, such as early retirement, cost of living adjustments, subsidized benefits, remarriage, death or disability.
Entrust the drafting of your QDRO to our experts. We will have your QDRO prepared within one week of receiving the necessary documents to begin work or we will not charge you for our services. We will work effectively with plan administrators and efficiently for you. Contact us with questions at (303)863-0777.